This time, however, the scene was slightly different. The promoters of some well-known and, hitherto, respected companies joined hands with the Big Bull of yesteryears, Harshad Mehta, to prop up their share values artificially, apparently to protect themselves from any takeover attempts. The scrips of BPL, Videocon, Sterlite, Zee Telefilms and Pentafour Software witnessed big fluctuations with the scrip prices reaching dizzying heights only to crash later.

In fact, the saga of Harshad Mehta continues to haunt the markets. If he managed to shake the foundations of the stock markets in 1991-92 as abroker of the Bombay Stock Exchange, this time he managed it through newspaper columns and internet website. He started recommending scrips like BPL, Videocon and Zee through the media which were nicknamed `Harshad scrips'. ``A hype was created. Brokers and investors took his image for granted and blindly follwed Harshad's advice. They started investing heavily in scrips recommended by him. When the prices fell after the union budget, these investors suffered,'' said a broker who was associated with him earlier.When the price rigging was going on in several shares, market regulator SEBI and stock exchange governing boards were silent spectators. In fact, when Harshad became active in January 1998, BSE Sensex was in the region 3,200. The sustained rigging in shares like BPL, Videocon, Sterlite, Zee Telefilms and some software shares sent the entire market into the bull orbit. Result: Sensex touched the 4280 level by April. BPL shot up by nearly 1,000 per cent from Rs 42 to Rs 449!

Yet again, the regulatorsand stock exchange governing boards failed to notice the writing on the wall. When Videocon International shot up by over 700 per cent from Rs 24 to Rs 178, the watchdog and the exchange governing boards mostly filled with brokers as directors failed to act. The government and market pundits realised the danger only when the brokers acting on the advice of Harshad Mehta failed to meet their payment obligations. ``It was waiting to happen. It seems the government and the regulators were just waiting for another crisis to develop,'' said a fund manager with a foreign investment firm.

If both regulatory and systemic failures were responsible for the securities scam in 1991-92, this time regulatory lapses seem to have been responsible for the excessive speculation on the stock markets. Senior SEBI officials talk of safeguard measures like margins, price band and stringent monitoring and penalties. Pray, then how the market collapse took place? Sensex which was above the 4,200 level crashed to the 2,900 levela fortnight ago. Market capitalisation (the total value of all listed shares) fell by Rs 1,62,000 crore to Rs 4,60,000 crore within two months. Put simply, investors lost this whopping amount in the stock manipulation engineered by the big bull.

The big bull changed his tactics in the 1998 boom as his BSE membership card was suspended after the 1992 scam. A syndicate of brokers loyal to Harshad Mehta bought the shares of scrips like BPL, Videocon International and Sterlite. He avoided scrips of big companies and those dominated by FIIs. Simultaenously, Harshad recommended these shares through his columns and internet websites. Gullible investors were impressed by this phenomenal rise in share prices and joined the band-wagon. After the Sensex collapsed, SEBI and stock exchange boards worked overtime and imposed a slew of measures like ban on short sales and hefty margin on share deals. They failed to impose such curbs when the market was manipulated by rogue traders.In fact, the stock manipulation was awell-calculated strategy. While Videocon chairman V N Dhoot announced in a press conference that he was launching an open offer to buy two per cent of the company's stake from the shareholders, Subhash Goel of Zee Telefilms said in a brief press statement that the promoters would be buying two per cent from the market in order to increase their stake in the company. Both the announcements in March fueled the rise of Videocon and Zee scrips making them top gainers for successive weeks. This went in tandem with the buying operations of Harshad's brokers in the market. Now these scrips are back to their original levels.Says Dhoot: "The Videocon scrip went up and down along with the markets. There are many scrips which went up and down with the Sensex. We do not have any connections with Harshad Mehta.'' The director (finance) of Zee Telefilms, Gopal Maliwalji, says the promoters did not go ahead with the share purchase from the markets as the stock prices went up. The promoters of Zee were quite aware of theimplications of their price-sensitive announcement that they were buying two per cent share from the open market. When the share price went up, they decided against purchasing shares from the market. The losers are again small investors.

``What was the necessity to launch an open offer at a time when the SEBI's guidelines were not clear? Why two per cent? As per SEBI rules the open offer should be made for at least 20 per cent,'' asks a Mumbai-based corporate lawyer about Videocon. But it was the colossal failure of SEBI to take notice of such developments which has surprised many. The regulator could have asked these companies for more details on these offers. It was an open secret in the market, SEBI offices and North Block (Finance Ministry office) that Harshad Mehta's brokers were active in these scrips and price manipulation was rampant.

"Our retail investors do not feel safe. In fact, they have deserted the markets as we have not yet rectified the root causes of the problems faced by the stockexchanges such as excessive short-term speculation, extensive price rigging, extreme volatile conditions, rampant insider trading, front-running and shifting of speculative positions by operators from one market to another,'' says former UTI chairman G S Patel.

However, SEBI chairman D R Mehta maintains that the market safety has not been affected and SEBI has taken precautionary measures like margin collection, imposition of circuit breakers and so on. ``We started investigating the price manipulation even before payment problem came out in the open,'' Mehta said.

Whatever may be the outcome of the 1998 stock scam, one thing is clear. Despite Yashwant Sinha's all market-boosting attempts like share buy-back, the confidence of small investors remains shaken. It will take many more years for them to come back to the markets and invest their hard-earned funds.